he had been in Congress, for Southern Congressmen were restored by scores if not by hundreds; not that he had been the chief of the revolutionary government, for that would only be a difference of degree in an offense in which all had shared. The point of objection was that Mr. Davis, with the supreme power of the Confederacy in his hands, both military and civil, had permitted extraordinary cruelties to be inflicted upon prisoners of war. He was held to be legally and morally responsible, in that, being able to prevent the horrors of Andersonville prison, he did not prevent them.

The debate took a somewhat wide range, engaging Mr. Blaine and General Garfield as the leading participants on the Republican side, and Benjamin H. Hill, Mr. Randall, and Mr. Cox on the Democratic side. Upon a second effort to pass the bill with an amendment requiring an oath of loyalty as a prerequisite to removal of disabilities, it failed to secure the necessary two-thirds, the ayes being 184, the noes 97. All that the Republicans demanded was a vote on the exclusion of Jefferson Davis, and this was steadily refused. Many gentlemen of the South are still under disability because of the parliamentary tactics pursued by the Democratic party of the House of Representatives at that time. If a vote had been allowed on Jefferson Davis, his name would have been rejected, and the bill, which included even Robert Toombs and Jacob Thompson, would have been passed without delay. If Mr. Davis thought that he was ungenerously treated by the Republicans, he must have found ample compensation in the conduct of both Southern and Northern Democrats, who kept seven hundred prominent supporters of the rebellion under disability for the simple and only reason that the Ex-President of the Confederacy could not share in the clemency.

CHAPTER XXIV.

THE PUBLIC CREDIT.-FIRST LAW ENACTED UNDER PRESIDENT GRANT. - DEMOCRATIC OPPOSITION. THURMAN, GARRETT DAVIS, BAYARD. PRESIDENT GRANT'S FIRST MESSAGE.FUNDING BILLS DISCUSSED. - ACTION OF BOTH HOUSES. - DEBATES. FURTHER REDUCTION OF REVENUE.-PREMIUM ON GOLD.-MEETING OF FORTYSECOND CONGRESS.- FINANCIAL DEBATES. - FINANCIAL PANIC OF 1873.- FORTYTHIRD CONGRESS MEETS. PRESIDENT GRANT'S POSITION. - ABOLITION OF MOIETIES. -SPECIE PAYMENTS. RESUMPTION ACT.-SPECIAL MESSAGE OF THE PRESIDENT. - ADMISSION OF COLORADO.- DEATH OF SPEAKER KERR. SAMUEL J. RANDALL HIS SUCCESSOR.

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THE course of President Grant's Administration in regard to the

which received his signature was the Act "to strengthen the public credit," approved March 18, 1869. It pledged the Government to the payment in coin, or its equivalent, of all obligations, notes, and bonds, except those where the law authorizing the issue stipulated that payment might be made in "lawful money," which simply meant legal-tender notes. The demand for this declaratory Act arose from a desire to undo the evil which had been caused by the resolution of the Democratic party in the preceding Presidential election in favor of paying all public debts in paper, except where coin was specifically named in the law. The position of each party was therefore precisely the reverse of the other: the Republicans held the normal law of payment of Government obligations to be in coin, unless payment in paper money had been previously agreed upon; the Democrats held that all Government obligations might be discharged in paper, unless payment in coin had been previously agreed upon. This was the division line in the Presidential canvass of 1868, and it was the division line among parties in the Forty-first Congress. In the House, where the Act had been reported by General Schenck, the vote on its passage was 98 ayes to 47 noes. No Democrat voted in the affirmative. A few Republicans, under the lead of General Butler, voted in the negative.

When the Act was reported to the Senate, Mr. Thurman offered an amendment declaring that "nothing in this Act shall apply to the obligations commonly called Five-twenty bonds." This would reserve three-fourths of the bonded debt from the operation of the law, and would effectually defeat its object. Every Democrat in the Senate who voted on the question, voted in favor of Mr. Thurman's amendment. Mr. Morton of Indiana and one or two other Republican senators voted with the Democrats, but the amendment was defeated by a decisive vote.

-Mr. Garrett Davis offered an amendment, "that the just and equitable measure of the obligation of the United States upon their outstanding bonds, is the value at the time in gold and silver coin of the paper currency advanced and paid to the Government on those bonds." Mr. Davis argued earnestly in favor of his amendment. He declared it to be "robbery and iniquity for this Congress to make the people of the United States pay nearly $900,000,000 more than by law and equity they are bound to pay."

-Mr. Bayard seconded the arguments of Mr. Davis. "Suppose, instead of issuing paper money," said Mr. Bayard, "it had pleased Congress to order a debasement of our National coinage. Suppose twenty-five per cent more of alloy or worthless metal had been interjected into our currency, and with that base coinage men had come forward to buy your bonds, what would be thought of the man who, when the day of payment of those bonds arrived, should say, 'I gave you lead, or lead in certain proportions; but for all the worthless metal I handed you, you must give me back pure gold'? Whether he was more maddened or more dishonest would be the only question arising in men's minds." Mr. Bayard used this analogy to illustrate the wrong of paying the bonds of the Government in coin, and expressed the belief that the debasing of the coinage would have been "far more Constitutional and right than the power which Congress exercised when they issued paper money."

When President Grant sent his first annual message to Congress (December, 1869), the National debt, less cash in the Treasury, amounted to $2,453,559,735, the cash being $194,674,947. The aggregate obligations bearing interest in coin had risen to $2,107,938,000; while the three per cent certificates and the Navy pension-fund, which alone carried interest in currency, amounted to $61,195,000. The debt bearing no interest, composed of old demand-notes, legaltenders, fractional currency, and certificates for gold deposited, had

fallen to $431,861,763. The seven-thirty notes had disappeared from the financial statement, and the bonds authorized by the Act of March 3, 1865, amounted to $958,455,700. The rate of interest on the bonds still stood at six per cent, except on the old debt of 1858 and 1860, and upon $194,567,300 of the ten-forties issued under the Act of March 3, 1864. One of the chief recommendations in the President's message was the refunding of the debt in bonds, with interest not exceeding four and a half per cent. He urged legislation for redeeming the legal-tenders at their market value, at the option of the holder, increasing the rate from day to day or week to week. He believed "that immediate resumption, even if practicable, would not be desirable," but that "a return to a specie basis should be commenced immediately." He expressed the belief that the revenue might be at once reduced $60,000,000 or possibly $80,000,000 a year. In connection with this feature of the message, Secretary Boutwell submitted a well-matured plan for funding the debt and expressed entire confidence in its success.

The result was the refunding Act of July 14, 1870. It was a broad and effective measure. It was subsequently modified by the Act of Jan. 20, 1871, permitting the payment of interest quarterly, and increasing the amount of bonds bearing five per cent interest. The two laws for purposes of refunding, taken together, authorized the issue of $500,000,000 at five per cent, $300,000,000 at four and a half per cent, and $1,000,000,000, at four per cent, all to be payable in coin, to be exempt from taxation, and to be issued without any increase of the debt. The fives were redeemable after ten years, the four-and-a-halfs after fifteen years, the fours after thirty years. The laws were not enacted without considerable legislative controversy. The exemption from taxation and the payment in coin were stubbornly though unsuccessfully resisted. A proposition to state the interest in sterling money and in francs, as well as in dollars, so that the bonds might be more easily negotiated abroad, was vigorously pressed, but was happily defeated.

Further reduction of the revenue was effected by the Act of July 4, 1870. There was an earnest effort to repeal the income tax, but it was retained for the year, and was to terminate at the end of 1871. The duties on tea, coffee, sugar, and some articles of iron and steel, were diminished. In presenting the conference report Mr. Schenck estimated that the reduction in customs charges by the Bill would be $27,000,000, and in the internal taxes more than

$50,000,000. Many persons feared that the reduction of taxes was too rapid, but it was impossible to resist a movement so popular as the removal of the burdens left by the war. Under such a pressure it was probable that Congress might not have sufficient regard to the prospective needs of the Government.

The condition of trade, wise legislation, and the hope of refunding the debt with rapid reduction of interest, were producing beneficent results; but the expectations of the Secretary of the Treasury in regard to the prompt sale of the new bonds were rudely shocked by the war between France and Germany, which was declared immediately after Congress had clothed him with enlarged powers. At home, as well as in Europe, the money markets were so far disturbed that prudence forbade immediate action. After a necessary postponement and careful preparation Mr. Boutwell gave notice that on March 6, 1871, books would be opened in this country and in Europe for subscriptions to the bonds. Preference was awarded to subscribers for the five per cents within the limit of $200,000,000. On the anniversary of the passage of the Act, July 14, 1871, a proposition came from a syndicate of London bankers to take the whole amount of the five per cents. The National banks, with a few individuals in this country, subscribed for $117,518,950, and the residue was conceded to the foreign syndicate.

The leading arguments in the House for the policy of refunding were made by Mr. Dawes and by Mr. Ellis H. Roberts. The gain to the Government, as they proved, would be obvious and great. If the new bonds were exchanged for the whole amount of six per cents already issued, and were to run only till the time of redemption, the saving, without compounding interest, would amount to an enormous aggregate, certainly exceeding $600,000,000. The country was therefore disappointed that events beyond the sea had for a time suspended the operations of funding, and compelled the Treasury to maintain its high rate of interest. The suspension was not due to the neglect or mismanagement of any executive officer, or to lack of foresight on the part of Congress in providing the requisite legislation. It was simply a case in which the money market for the time prevented the Secretary of the Treasury from accomplishing any large proportion of the total funding operations contemplated by the Government.